Jack In The Box 2005 Annual Report Download - page 57

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)
5. LEASES
As lessee – We lease restaurants and other facilities, which generally have renewal clauses of 5 to 20 years exercisable at
our option. In some instances, our leases have provisions for contingent rentals based upon a percentage of defined
revenues. Many of our leases also have rent escalation clauses and require the payment of property taxes, insurance and
maintenance costs. We also lease certain restaurant, office and warehouse equipment, as well as various transportation
equipment. Minimum rental obligations are accounted for on a straight-line basis over the term of the initial lease. Total
rent expense was as follows:
2005 2004 2003
Minimum rentals ........................................................................... $ 184,169 $ 178,937 $ 167,109
Contingent rentals.......................................................................... 3,157 5,250 6,029
187,326 184,187 173,138
Less sublease rentals...................................................................... (26,086) (22,060) (17,744)
$ 161,240 $ 162,127 $ 155,394
During fiscal year 2005, we exercised our purchase option under certain lease arrangements and purchased approximately
31 JACK IN THE BOX restaurant properties. By year-end, we had subsequently sold and leased back 7 of these properties at
more favorable rental rates. We anticipate selling and leasing back the remaining sites during fiscal 2006, which are
included in assets held for sale and leaseback at October 2, 2005.
Future minimum lease payments under capital and operating leases are as follows:
Fiscal
year
Capital
leases
Operating
leases
2006 ....................................................................................................................... $ 6,685 $ 178,829
2007 ....................................................................................................................... 6,654 168,526
2008 ....................................................................................................................... 6,288 156,856
2009 ....................................................................................................................... 2,977 141,709
2010 ....................................................................................................................... 2,238 128,558
Thereafter............................................................................................................... 12,255 931,536
Total minimum lease payments ................................................................................. 37,097 $ 1,706,014
Less amount representing interest, 7.97% average interest rate ................................. (10,782)
Present value of obligations under capital leases ....................................................... 26,315
Less current portion ................................................................................................... (4,695)
Long-term capital lease obligations ........................................................................... $ 21,620
Future minimum sublease rents of $494,285 are expected to be recovered under our operating subleases. Assets recorded
under capital leases are included in property and equipment and consisted of the following at each year-end:
2005 2004
Buildings.................................................................................................................... $ 23,072 $ 22,161
Restaurant equipment................................................................................................. 18,289 18,289
41,361 40,450
Less accumulated amortization.................................................................................. (19,255) (14,452)
$ 22,106 $ 25,998
Amortization of assets under capital leases is included in depreciation and amortization expense.
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